A company reports the following: Net income $1,360,500 Preferred dividends $77,000 Shares of common stock outstanding 85,000 Market price per share of common stock $81.54 a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required. b. Determine the company's price-earnings ratio. Round to one decimal place.
A company reports the following: Net income $1,360,500 Preferred dividends $77,000 Shares of common stock outstanding 85,000 Market price per share of common stock $81.54 a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required. b. Determine the company's price-earnings ratio. Round to one decimal place.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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13.
Transcribed Image Text:Earnings per Share and Price-Earnings Ratio
A company reports the following:
Net income
$1,360,500
Preferred dividends
$77,000
Shares of common stock outstanding
85,000
Market price per share of common stock
$81.54
a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a
for subsequent requirement, if required.
b. Determine the company's price-earnings ratio. Round to one decimal place.
Expert Solution
Step 1
Earnings available for common stockholders = Net income - Preferred dividends
= $1360500-77000
= $1283500
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